State jobless rate at 7.3%

Unemployment hits a 12-year high and is projected to rise next year even if the economy stabilizes.

SACRAMENTO — California's unemployment rate climbed to a 12-year high last month as the state continued to bleed jobs in the real estate and construction industries.

The rate jumped to 7.3% in July from 7% in June. It was even worse in the Inland Empire, where the unemployment rate is approaching 9%, the state reported Friday.

"The depth and magnitude of the job losses are accelerating, clearly," said Esmael Adibi, director of economic research at Chapman University in Orange.

Adibi and other economists believe unemployment will continue rising next year even if the economy stabilizes. "Unfortunately, the unemployment rate is a lagging indicator," he said.

Once the economy improves, people who have fallen out of the job market will jump back in, which will keep the unemployment rate well into the 7% range through much of next year, he said.

That could feel like an eternity for Art Garcia, 24, of Echo Park. He's been searching for a modest-paying position for six months since losing his manager's job at the Macy's department store in the Glendale Galleria.

"I'm looking for anything at this point," he said while updating his resume at a state job center. "The only jobs available are at McDonald's, KFC or Taco Bell, but you can't survive on $8 an hour -- not with these gas prices."

Garcia is one of 1.4 million jobless Californians. "Christmas of 2008 is going to be very unpleasant," said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.

The Golden State's unemployment rate is almost 2 full percentage points higher than the 5.4% level of July 2007 and well above last month's national rate of 5.7%, the California Employment Development Department said.

Kyser suggested that unemployment was not likely to ease until early 2010, when "we're going to be past the worst problems in the housing sector and, hopefully, international trade imports will show a little more [strength] and retail will be stabilized."

His short-term pessimism is grounded in rising unemployment and California's loss of 14,900 jobs in the last month and 75,900 in the last year. State employment totaled 15.1 million people in July.

Much of the job erosion is fueled by a "double whammy of sharp declines in real estate prices and the high cost of energy," said Sung Won Sohn, an economist at Cal State Channel Islands. "Many people in low incomes are having difficulty making ends meet."

That's the fix Celeste Knox is in. She is one of about 10,000 government workers laid off by Gov. Arnold Schwarzenegger in an effort to save cash amid a six-week standoff with legislators over how to fill a $15.2-billion hole in the state budget.

Knox, 39, a single mother of two, said she closed on the purchase of a house in the Sacramento suburbs just hours before she got her pink slip July 30.

"I'm looking for work and going to temporary agencies," she said. "I thought I was secure, but now I'm stuck out here with the rest of the people."

Knox has plenty of company. The job picture darkened statewide in July with the creation of only 900 jobs in two broad areas: trade, transportation and utilities; and education and health.

At the same time, employment dropped by 15,800 in nine other industries, including construction, manufacturing, information, financial activities, professional and business services, leisure and hospitality and government.

In the L.A. metropolitan area, the unemployment rate rose even higher, reaching 7.5%, up from 7% in June. Local job losses last month were particularly deep in government and the motion picture and sound recording field.

The unemployment rate was worse in Riverside and San Bernardino counties, rising to 8.9% in July from a revised 8.1% in June.

Orange County fared better, with the rate reaching 5.7% in July, up four-tenths of a percentage point from the previous month.

"Construction and financial services continue to struggle in California, but I am encouraged about recent increases in housing purchases and that other job sectors -- while they do not have the robust growth we want or expect in California -- are holding steady," he said.

Schwarzenegger promised to include an "economic stimulus package" in the state's overdue budget.

He said he'd like to speed up the funding of public works to generate more construction jobs.

Any boost in building could be a boon to Elvis Orellana, 30, who lost his job as a painter for a Monterey Park contractor in March.

"I barely have money to pay the rent," he said. "Business is slow, so nobody's hiring. I can't find anything full-time or part-time.